View Full Version : bargain value?

12-05-2005, 08:46 AM
Companhia de Saneamento Basico do Esado de Sao Paulo(NYSE:SBS)
Provides public water and sewage services to a range of residential, commercial, industrial and governmental customers in the City of Sao Paulo, as well as other municipalities in the State of Sao Paulo.

PE Ratio - LTM 4.9
Price/Tangible Book Ratio 0.52
Gross Profit Margin 63.5
EBITDA Margin 45.5
Book-Value pS 31.18

Trading at 16.25


12-05-2005, 08:47 AM
Can a stock trade much below 50% its book value?

12-05-2005, 11:59 AM
The concern is that it's highly regulated, by a government that has not always had the greatest respect for capitalist principles. I own KEP, Korean Electric Power, which is in a similar situation, and is also trading below book. My understanding of Brazilian politics is pretty limited, but I believe that the president, Lula, is from the left-most major party, and hasn't made any big moves against business or utilities. In other words, the political environment might get better, but it probably won't get worse.

This looks like a great hedge against a declining dollar. The company's business isn't really affected by the US economy, and it'll be profitable even if the dollar stays flat.

Any dividends for this, or links to more information besides Yahoo finance? It's hard to get info on these ADRs.

12-05-2005, 01:20 PM
Don't worry, President Lula wont get reelected on 2006 and even if so, he won't do much harm cause he's just talk and no action. Maybe one of the least radical members of PT (his political party).

12-05-2005, 03:17 PM
That's what I'm saying: he's about as left-wing as Brazil is likely to elect, and he's still not interfering much with business. It's as if we had elected Ralph Nader. Initially, there would be big concerns about government intervention in all sorts of areas. If he went a few years without intervening, investors could relax, because nothing would be likely to happen, and the US wouldn't elect anyone more liberal than him.